What makes luxury retail a challenging business?

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Luxury products have always been one of the most admired and sought after products. So much so, that consumers of such products take pride in their possessions and are often considered to be of a higher class. They and their products are the ‘talk of the town’ most of the times in social gatherings and people like to be associated with such class conscious, brand loving and luxury seeking consumers. Luxury products therefore had few options and demanded a high cost of purchase deliberately tailored to a select set of consumers.

But now times have changed thanks to rapidly changing consumer mindsets and the very idea of “luxury” is evolving. The old-fashioned ideas that defined luxury as aspiration, high status, exclusive, wealthy, don’t really paint the exact picture of what customers perceive about luxury products. One of the drastic changes over the recent years is that the new age luxury isn’t for showoff.  Similarly other values that luxury brands exclusively attributed to, such as better quality and style, precise workmanship and great designs, are not exclusive any more to luxury.

Consumers’ tastes are evolving. There is an indisputable appeal for new products and services along with more choice of options yet having the flavor of uniqueness and exclusivity. This has given rise a various breeds of brands such as specialised ones and those that are highly customised to customer demands, thus increasing competition.

Further, along with changing tastes, customer shopping patterns and buying behaviour have undergone a tremendous transformation. Traditionally, luxury shoppers heavily relied on physical retail to fulfil their desire for luxury goods. But now, multiple channels have come into the game and customers willingly switch between channels to get what they want. Seamless demand fulfilment across channels necessitates the reduction of various issues such as decrease in quality or other losses that are caused during the course of the supply chain. While older shoppers are still playing a significant role in the luxury market spends, millennial’s and Gen Zs are predicted to account for the larger growth in the coming years. Moreover, their new spending habits which are faster, more frequent, brand-conscious and trend-driven while being highly influenced by digital platforms.

All these are the modern day challenges that luxury retail businesses, especially the ones still depending heavily on the heritage and traditional processes are facing and there is one way out. They need to transform their retail businesses to omni-channel and employ the right omni-channel retail software to exceed their customer expectations and fulfil their business goals.

The opportunities to create an engaging retail experience

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Gone are the days where retail used to be treated as a transactional business where in retailers sold the products to consumers who came to their stores to buy those and the mutual give and take of the product and the cost was the be all and end all. It has all changed now. While the transaction is still integral, it is just one of the many processes that make the retail business the way it is today.

A shopper not only buys a product from a retail brand, he/she wants to interact and engage with brand across certain stages of the shopping journey which has evolved into a complex, multi-dimensional journey that shoppers embark upon when they want to buy a product. This complexity has come in due to the influence of technology into the retail sector leading to substantial shifts in the shopping behaviour. The point to focus is not on the complexity but the opportunities that retailers have to connect with their end customers.

Consider this scenario – a shopper intends to purchase a mobile phone. So he decides to research about the options and varieties online on the website of his preferred retail brand. He is not happy with the options so he decides to further research on a market place online. Having shortlisted the devices that he could consider to buy, he visits multiple stores to check out the devices, to have an experience of their look-and-feel. Still not convinced of which one to go with, he goes onto social media and seeks opinions. Moreover, he also checks out information portals that review products.

Now, the above shopping journey is an incomplete one since the purchase has not happened yet, however it is interesting to note the number of times the shopper has interacted with the brand through multiple touch-points. From a retailer’s point-of-view, these are indeed the opportunities for the brand to interact and engage with the customer. The above scenario is one of the complex shopping journeys and the complexity can further increase along with the number of touch-points that can be used throughout the entire shopping journey. Again, these are multiple opportunities that retail brands have to interact and engage with the customer and create the impact.

To sum up, as shopping behaviour has evolved, it has provided ample opportunities for retail companies to go beyond the traditional concepts of retailing. Rather, this evolution has enabled brands to meet and greet their customers across multiple stages and touch points of their shopping journey. Ultimately, customers prefer an engaging experience and those brands who will be able to offer that kind of an experience will thrive.

Black Friday and Cyber Monday 2017 – key takeaways

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As the Black Friday weekend came to a steady close, the Black Friday and Cyber Monday sales statistics are now in the books and with that data in hand, it is time to dissect it, dive deeper into various aspects of it, analyse it, and make note of the inferences and learnings to be used for the future.

To begin with, it was reported that American consumers spent over US $19 billion online over the five-day period from Thanksgiving through Cyber Monday in 2017. This was a 15 percent rise in spends as compared to spends done during the same time-frame last year.

Moving on, more than 64 million Americans used both online and physical stores to carry out their purchases from Thanksgiving Day through Cyber Monday. Consumers who shopped at both online and brick-and-mortar stores spent US $82 more on an average than online-only shoppers, and US $49 more on an average than brick-and-mortar stores-only shoppers. Black Friday 2017 seemed to be the most popular day for brick-and-mortar retail stores with more than 70 million shoppers, followed by Small Business Saturday (Nov. 25, 2017) with about 55 million shoppers.

One of the most important takeaways for retail businesses basis the above statistics is both offline and online retail channels were used by consumers to shop. In fact, consumers who used more than one channel to shop spent higher on an average than those who used only a single channel.

Mobile shopping or m-commerce has developed in to a popular channel for consumers to discover and buy products. And this popularity reached new levels this year as mobile purchases surpassed those on desktop throughout the entire Black Friday weekend. Mobile sales accounted for more than 60% of orders overall, an increase of 10% over the last year. Thus, retailers across the globe need to definitely harness this channel to boost their sales in the future.

With online, offline and mobile – 3 important channels at play significantly in this year’s Black Friday and Cyber Monday shopping event, a very important learning for retailers is that omni-channel retail can help them maximize their sales.

Another important aspect of this year’s Black Friday shopping event was that, though dominated by U.S., other countries across the globe also noted a significant spike in their sales on the same day. Reports state that countries like South Africa, Spain and the United Kingdom saw over 3 times as many orders on Black Friday, whereas Germany, Canada and France witnessed over 2 times the orders. Other countries like Ireland, Singapore and China also noticed a bump in the number of orders on Black Friday 2017. Thus Black Friday is becoming a global phenomenon soon. For retail businesses across the globe, this translates into an opportunity to attract more customers and drive higher sales.

Retail brands looking to strike big in the near future must pay heed to these key takeaways and use the right combination of people, processes and technology to succeed.